GRAN TIERRA ENERGY INC
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
GTE$9.42+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001273441-24-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001273441-24-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 85 current paragraphs.
25 unchanged; 40 reworded; 20 added; 15 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
•Net income in the second quarter of 2024 was $36.4 million or $1.16 per share basic and diluted, compared to a net loss of $10.8 million or $(0.33) per share basic and diluted in the second quarter of 2023 and a net loss of $0.1 million in the prior quarter
Current report
•Funds flow from operations(2)was $46.2 million, compared to $53.1 million in the second quarter of 2023 and $74.3 million in the prior quarter
Current report
•Operating expenses decreased by 3% to $47.0 million when compared to the second quarter of 2023, primarily as a result of lower lifting costs. On per bbl basis, operating expenses increased by $0.98 to $20.52 compared to the corresponding period of 2023 as a result of 8% lower sales volumes in the current quarter. Operating expenses decreased from $48.5 million in the prior quarter as a result of lower workover activities and were comparable on a per bbl basis
Current report
•Operating netback(2)increased to $112.9 million compared to $105.7 million in the second quarter of 2023 and $104.5 million in the prior quarter
Current report
•General and administrative (“G&A”) expenses before stock-based compensation for the second quarter of 2024 increased to $10.7 million compared to $9.5 million in the second quarter of 2023 and $9.5 million in the prior quarter due to higher information technology expenses, general office expenses and bank fees during the current quarter
Current report
Realized price per bblfor the three and six months ended June 30, 2024, increased by 14% and 9%, respectively, compared to the corresponding periods of 2023, primarily as a result of a 9% and 4% increase in Brent price and lower differentials. For the three and six months ended June 30, 2024, Castilla differentials decreased to$8.21 and $8.51 per barrel from$9.41 and $12.29 per barrel, respectively, in the corresponding periods of 2023. Vasconia differentials decreased to $4.00 and $4.52 per barrel from$5.53 and $6.70 per barrel, respectively, in the corresponding periods of 2023. Oriente differentials decreased to$8.38 and$8.20 per barrel from $11.43 and $12.43 per barrel, respectively, in the corresponding periods of 2023.
Current report
Oil salesfor the three and six months ended June 30, 2024, increased by 5% and 7% to $165.6 million and $323.2 million, respectively, compared to the corresponding periods of 2023 due to a 9% and 4% increase in Brent price and lower Castilla, Vasconia, and Oriente differentials, partially offset by an 8% and a 2% decrease in sales volumes, respectively.
Current report
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to note 2 “Non-GAAP measures” in “Financial and Operational Highlights” for a definition and reconciliation of this measure.
Current report
Operating expenses for the three months ended June 30, 2024, decreased by 3% to $47.0 million compared to the corresponding period of 2023, primarily due to lower lifting costs, partially offset by higher workover activities. On a per bbl basis, operating expenses increased by $0.98 per bbl to $20.52 per bbl compared to the corresponding period of 2023 as a result of 8% lower sales volumes in the current quarter.
Current report
Operating expenses for the six months ended June 30, 2024, increased by 6% to $95.5 million or by $1.54 per bbl to $20.47 per bbl compared to the corresponding period of 2023, primarily as a result of higher workover costs.
Current report
Compared to the prior quarter, operating expenses decreased by 3% from $48.5 million, primarily due to lower workover activities and were comparable on a per bbl basis.
Current report
On a per bbl basis, transportation expenses for the three and six months ended June 30, 2024, increased by $0.99 and $0.78 to $2.48 and $2.20, respectively, compared to the corresponding periods of 2023 for the same reason mentioned above.
Current report
Transportation expenses increased by 24% or $0.55 per bbl from $4.6 million, or $1.93 per bbl in the prior quarter for the same reason mentioned above.
Current report
DD&A expenses for the three months ended June 30, 2024, were comparable to the corresponding period of 2023. On a per bbl basis, DD&A expenses increased by $1.56 due to lower sales volumes in the current quarter.
Current report
DD&A expenses were comparable to prior quarter. On a per bbl basis, DD&A expenses increased by $0.55 compared to the prior quarter, due tolower sales volumes in the current quarter.
Current report
G&A expenses before stock-based compensation for the three months ended June 30, 2024, increased by 12% or $0.83 per bbl due to higher information technology expenses, general office expenses and bank fees compared to the corresponding period of 2023.
Current report
G&A expenses before stock-based compensation for the six months ended June 30, 2024, decreased by 2% to $20.3 million due to lower legal costs compared to the corresponding period of 2023. On a per bbl basis, G&A expenses before stock-based compensation were comparable to the corresponding period of 2023.
Current report
G&A expenses after stock-based compensation for the three and six months ended June 30, 2024, increased by 71% and 32%, or $3.39 and $1.63 per bbl, respectively, compared to the corresponding periods of 2023 due to share price appreciation and the modification of the accounting for the stock option plan from equity to liability which resulted in additional compensation costs in the current quarter of $0.4 million.
Current report
The company strategically revised its 2022 tax return to use its tax receivables balance to offset current tax liabilities, rather than applying net operating loss carryforwards. This decision was driven by the expectation of higher future tax rates and increased profitability. As a result, there was an increase in current tax expense, which was offset by long-term tax receivables, ensuring no impact on cash flows. However, the increased tax expense did negatively affect our fund flows. Nonetheless, this approach preserved our net operating loss carryforwards for future periods, providing greater tax benefits and flexibility in recovering tax receivables, while strengthening our equity position.
Current report
We spud one development well in Chaza Block in Colombia, which was in-progress as of June 30, 2024, and two exploration wells in Ecuador, all of which were producing as of June 30, 2024.
Removed paragraphs (15)
Previous report
•Net loss in the first quarter of 2024 was $0.1 million, compared to a net loss of $9.7 million in the first quarter of 2023
Previous report
•Funds flow from operations(2) increased by 24% to $74.3 million, compared to $60.0 million in the first quarter of 2023 and decreased by 12% from $84.7 million in the prior quarter
Previous report
•Operating expenses increased by 17% to $48.5 million or by $2.16 per bbl to $20.42 per bbl when compared to the first quarter of 2023, primarily as a result of higher workovers and higher lifting costs associated with preventative maintenance activities. Operating expenses increased from $47.6 million in the prior quarter as a result of higher workovers, offset by lower lifting costs related to power generation optimizations in major fields. On a per bbl basis, operating expenses decreased from $20.75 in the prior quarter due to higher sales volumes in the current quarter
Previous report
•Operating netback(2)increased to $104.5 million compared to $99.8 million in the first quarter of 2023 and $103.4 million in the prior quarter
Previous report
•General and administrative (“G&A”) expenses before stock-based compensation for the first quarter of 2024 decreased by 15% due to lower legal fees and information technology expenses compared to the first quarter of 2023 and decreased by 14% from the prior quarter due to lower legal fees and lower headcount
Previous report
Oil production NAR increased by 4% compared to the prior quarter as a result of our successful drilling and workover campaigns in Acordionero and Costayaco fields in Colombia and increased production in Charapa Norte field in Ecuador.
Previous report
Realized price per bblfor the three months ended March 31, 2024, increased by 4% compared to the corresponding period of 2023, primarily due to lower quality and transportation discounts. Castilla, Vasconia and Oriente differentials decreased to $8.82, $5.05, and $8.02 per bbl from $15.17, $7.87, and $13.43 per bbl, respectively.
Previous report
Oil salesfor the three months ended March 31, 2024, increased by 9% to $157.6 million, compared to the corresponding period of 2023, due to a decrease in Castilla, Vasconia, and Oriente differentials and a 4% increase in sales volumes resulting from the sale of inventory in Ecuador during the current quarter compared to the corresponding period of 2023.
Previous report
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights—non-GAAP measures” for a definition and reconciliation of this measure.
Previous report
Operating expenses for the three months ended March 31, 2024, increased by 17% to $48.5 million or by $2.16 per bbl to $20.42 per bbl compared to the corresponding period of 2023. This was primarily due to $1.74 per bbl higher workovers and $0.42 per bbl higher lifting costs associated with preventative maintenance activities which were partially offset by lower environmental and equipment rental expenses.
Previous report
Compared to the prior quarter, operating expenses increased by 2% from $47.6 million, primarily due to higher workovers offset by lower lifting costs related to power generation optimizations in Costayaco, Acordionero and Cohembi fields. On a per bbl basis, operating expenses decreased by $0.33 due to higher sales volumes in the current quarter.
Previous report
DD&A expenses increased by 7% or by $0.73 per bbl when compared to the prior quarter due to higher costs in the depletable base, lower reserves and higher production during the current quarter.
Previous report
G&A expenses before stock-based compensation for the three months ended March 31, 2024, decreased by 15% or $0.93 per bbl primarily due to lower legal fees and information technology expenses compared to the corresponding period of 2023.
Previous report
G&A expenses after stock-based compensation for the three months ended March 31, 2024, increased by 1% compared to the corresponding period of 2023 due to share price appreciation in the current quarter. On a per bbl basis, G&A expenses after stock-based compensation decreased by $0.17 per bbl due to a 4% increase in sales volumes compared to the corresponding period of 2023.
Previous report
We spud 11 development and two water injection wells, of which eight were in Midas Block and five in Chaza Block. Of the development wells spud during the quarter, ten were completed, and one was in-progress as of March 31, 2024. During the three months ended March 31, 2024, we have not spud any wells in Ecuador.
Reworded paragraphs (40)
Previous wording
The following discussion of our financial condition and results of operations should be read in conjunction with the “Financial Statements” as set out in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Items 7 and 8, respectively, of our 2023 Annual Report on Form 10-K. Please see the cautionary language at the beginning of this Quarterly Report on Form 10-Q regarding the identification of and risks relating to forward-looking statements and the risk factors described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as Part I, Item 1A “Risk Factors” in our 2023 Annual Report on Form 10-K. On May 5, 2023, the Company completed 1-for-10 reverse stock split of the Company’s Common Stock. As a result of the reverse stock split, every ten of the Company’s issued shares of Common Stock were automatically combined into one issued share of Common Stock. All share and per share data included in this quarterly report have been retroactively adjusted to reflect the reverse stock split.
Current wording
The following discussion of our financial condition and results of operations should be read in conjunction with the “Financial Statements” as set out in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Financial Statements and Supplementary Data” included in Part II, Items 7 and 8, respectively, of our 2023 Annual Report on Form 10-K. Please see the cautionary language at the beginning of this Quarterly Report on Form 10-Q regarding the identification of and risks relating to forward-looking statements and the risk factors described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as Part I, Item 1A “Risk Factors” in our 2023 Annual Report on Form 10-K. On May 5, 2023, the Company completed 1-for-10 reverse stock split of the Company’s Common Stock. As a result of the reverse stock split, every ten of the Company’s issued shares of Common Stock were automatically combined into one issued share of Common Stock. All share and per share data included in this quarterly report have been retroactively adjusted to reflect the reverse stock split.
Previous wording
Key Highlights for the first quarter of 2024
Current wording
Key Highlights for the second quarter of 2024
Previous wording
•Income before income taxes in the first quarter of 2024 was $17.3 million, compared to income before income taxes of $23.2 million in the first quarter of 2023
Current wording
•Income before income taxes in the second quarter of 2024 was $27.3 million, compared to income before income taxes of $22.9 million in the second quarter of 2023
Previous wording
•Adjusted EBITDA(2) increased to $94.8 million, compared to $89.9 million in the first quarter of 2023 and $93.0 million in the prior quarter
Current wording
•Adjusted EBITDA(2) increased to $103.0 million, compared to $97.3 million in the second quarter of 2023 and increased from $94.8 million in the prior quarter
Previous wording
•Inthe first quarter of 2024, we re-purchased 0.9 million shares of Common Stock through the 2023 share re-purchase program, representing 3% of outstanding shares as of March 31, 2024
Current wording
•In the second quarter of 2024, we re-purchased 0.4 million shares of Common Stock through the 2023 share re-purchase program. During the period from October 20, 2023 to July 29, 2024 we have re-purchased a total of 2.6 million shares or 8% of the outstanding shares as of June 30, 2024
Previous wording
•NAR production for the first quarter of 2024 was 25,845, comparable to 25,526 BOPD in the first quarter of 2023 and increased by 4% from 24,892 BOPD in the prior quarter
Current wording
•NAR production for the second quarter of 2024 decreased by 4% to 26,002 BOPD, compared to 27,204 BOPD in the second quarter of 2023 and was comparable to 25,845 BOPD in the prior quarter
Previous wording
•Sales volumes for the first quarter of 2024 increased by 4% to 26,080 BOPD, compared to 25,171 BOPD in the first quarter of 2023 andincreased by 5% from 24,949 BOPD in the prior quarter
Current wording
•Sales volumes for the second quarter of 2024 decreased by 8% to 25,191 BOPD, compared to 27,271 BOPD in the second quarter of 2023 and decreased by 3% from 26,080 BOPD in the prior quarter
Previous wording
•Oil salesfor the first quarter of 2024 were $157.6 million, 9% higher compared to the first quarter of 2023, primarily due to a decrease in Castilla, Vasconia and Oriente differentials and a 4% increase in sales volumes. Oil sales increased by 2% from $154.9 million in the prior quarter, primarily due to a 5% increase in sales volumes and lower Castilla differential, partially offset by higher Vasconia and Oriente differentials
Current wording
•Oil sales for the second quarter of 2024 were $165.6 million, 5% higher compared to the second quarter of 2023, primarily due to an increase in Brent price and lower Castilla, Vasconia, and Oriente differentials. Oil sales increased by 5% from $157.6 million in the prior quarter for the same reason mentioned above
Previous wording
•Transportation expenses per bbl increased by $0.58 and $0.21 when compared to the first quarter of 2023 and the prior quarter, respectively, due to higher trucking costs resulting from the utilization of longer distance delivery pointsin response to lower river levels in Colombia caused by El Niño.
Current wording
•Transportation expenses per bbl increased by $0.99 and $0.55 when compared to the second quarter of 2023 and the prior quarter, respectively, resulting from the utilization of longer distance delivery points in response to lower water levels in the Magdalena river
Previous wording
•Quality and transportation discounts for the first quarter of 2024 decreased to $15.36 per bbl compared to $18.45 per bbl in the first quarter of 2023, primarily as a result of the tightening of the Castilla, Vasconia, and Oriente differentials, and were comparable to the prior quarter
Current wording
•Quality and transportation discounts for the second quarter of 2024 decreased to $12.79 per bbl compared to $14.10 per bbl in the second quarter of 2023 and $15.36 per bbl in the prior quarter, primarily as a result of the tightening of the Castilla, Vasconia, and Oriente differentials
Previous wording
•Capital additions for the first quarter of 2024 were $55.3 million compared to $71.1 million in the first quarter of 2023 due to cost optimization of the 2024 drilling program and $39.2 million in the prior quarter due to lower drilling activity
Current wording
•Capital additions for the second quarter of 2024 were $61.3 million compared to $65.6 million in the second quarter of 2023 due to a lower number of wells drilled in the second quarter of 2024, and compared to $55.3 million in the prior quarter due to the commencement of the 2024 seismic program in Ecuador
Previous wording
EBITDA, as presented, is defined as net (loss) income adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gain or loss, stock-based compensation expense, other gain or loss and financial instruments loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net (loss) income to EBITDA and adjusted EBITDA is as follows:
Current wording
EBITDA, as presented, is defined as net income (loss) adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gain or loss, stock-based compensation expense and other gain or loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net (loss) income to EBITDA and adjusted EBITDA is as follows:
Previous wording
Funds flow from operations, as presented, is defined as net (loss) income adjusted for DD&A expenses, deferred income tax expense, stock-based compensation expense, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, other gain or loss and financial instruments loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net (loss) income to funds flow from operations is as follows:
Current wording
Funds flow from operations, as presented, is defined as net income (loss) adjusted for DD&A expenses, deferred income tax expense or recovery, stock-based compensation expense, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss and other gain or loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net income (loss) to funds flow from operations is as follows:
Previous wording
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights—non-GAAP measures” for a definition of this measure.
Current wording
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to note 2 “Non-GAAP measures” in “Financial and Operational Highlights” for a definition of this measure.
Previous wording
Oil production NAR for the three months ended March 31, 2024, was comparable to the corresponding period of 2023.
Current wording
Oil production NAR for the three and six months ended June 30, 2024, decreased by 4% and 2%, respectively, compared to the corresponding periods of 2023 due to lower volumes in the Acordionero field caused by downtime related to workovers, partially offset by higher production in the Costayaco field in Colombia, and increased production from the Chanangue Block in Ecuador related to positive exploration well drilling results. Oil production NAR was comparable to the prior quarter.
Previous wording
Royalties as a percentage of WI production for the three months ended March 31, 2024 were comparable with the corresponding period of 2023 and the prior quarter.
Current wording
Royalties as a percentage of WI production for the three and six months ended June 30, 2024 increased to 21% and 20%, respectively, compared to the corresponding periods of 2023 and the prior quarter, commensurate with the increase in benchmark oil prices and the price sensitive royalty regime in Colombia and Ecuador.
Previous wording
Compared to the prior quarter, the average realized price per bbl decreased by 2%, primarily due to a decrease in Brent price.
Current wording
Compared to the prior quarter, the average realized price per bbl increased by 9%, primarily due to a 4% increase in Brent price and lower differentials in the current quarter.
Previous wording
Compared to the prior quarter, oil sales increased by 2%, primarily due to a 5% increase in sales volumes resulting from the sale of inventory in Ecuador and a decrease in Castilla differential, offset by higher Vasconia and Oriente differentials.
Current wording
Compared to the prior quarter, oil sales increased by 5%, primarily due to a 4% increase in Brent price and lower Castilla and Vasconia differentials, partially offset by a 3% decrease in sales volumes and slightly higher Oriente differential.
Previous wording
The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three months ended March 31, 2024, compared to the prior quarter and the corresponding period of 2023:
Current wording
The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three and six months ended June 30, 2024, compared to the prior quarter and the corresponding periods of 2023:
Previous wording
We have options to sell our oil through multiple pipelines and trucking routes. Each option has varying effects on realized sales price and transportation expenses. The following table shows the percentage of oil volumes we sold in Colombia and Ecuador using each option for the three months ended March 31, 2024 and 2023, and the prior quarter:
Current wording
We have options to sell our oil through multiple pipelines and trucking routes. Each option has varying effects on realized sales price and transportation expenses. The following table shows the percentage of oil volumes we sold in Colombia and Ecuador using each option for the three and six months ended June 30, 2024 and 2023, and the prior quarter:
Previous wording
Transportation expenses for the three months ended March 31, 2024, increased by 50% and 16% or $0.58 and $0.21 per bbl to $4.6 million or $1.93 per bbl, compared to the corresponding period of 2023 and the prior quarter, respectively, due to utilization of longer distance delivery points in response to low river levels in Colombia caused by El Niño.
Current wording
Transportation expenses for the three and six months ended June 30, 2024, increased by 54% and 52% to $5.7 million and $10.3 million, respectively, compared to the corresponding periods of 2023, due to the utilization of longer distance delivery points in response to low water levels in the Magdalena river.
Previous wording
DD&A expenses for the three months ended March 31, 2024, increased by 8% or by $0.62 per bbl due to higher costs in the depletable base compared to the corresponding period of 2023.
Current wording
DD&A expenses for the six months ended June 30, 2024, increased by 5% or by $1.09 per bbl due to higher costs in the depletable base compared to the corresponding period of 2023.
Previous wording
For the three months ended March 31, 2024, severance expenses were $1.3 million compared with nil in the corresponding period of 2023 and the prior quarter as a result of headcount optimization. Severance expenses were recorded as incurred based on existing employee contracts, statutory requirements, completed negotiations and company policy.
Current wording
For the three and six months ended June 30, 2024, severance expenses were $0.2 million and $1.5 million, respectively, compared with no severance expenses in each of the corresponding periods of 2023, as a result of headcount optimization. Severance expenses were recorded as incurred based on existing employee contracts, statutory requirements, completed negotiations and company policy.
Previous wording
Compared to the prior quarter, G&A expenses before stock-based compensation decreased by 14% or $0.81 per bbl due to lower legal expenses and lower headcount.
Current wording
Compared to the prior quarter, G&A expenses before stock-based compensation increased by 13% or $0.67 per bbl due to increased activity and higher information technology expenses.
Previous wording
Compared to the prior quarter, G&A expenses after stock-based compensation decreased by 1% or $0.25 per bbl for the same reason mentioned above, offset by share price appreciation in the first quarter of 2024.
Current wording
Compared to the prior quarter, G&A expenses after stock-based compensation increased by 31% or $1.94 per bbl for the same reason mentioned above.
Previous wording
For the three months ended March 31, 2024, we had a $0.8 million gain on foreign exchange compared to a $1.7 million loss in the corresponding period of 2023 and a $3.7 million loss in the prior quarter. Accounts payable, taxes receivable and payable and deferred income taxes are considered monetary items and require translation from local currencies to U.S. dollar functional currency at each balance sheet date. This translation was the primary source of the foreign exchange gains and losses in the periods.
Current wording
For the three and six months ended June 30, 2024, we had a $4.4 million and $5.2 million gain on foreign exchange compared to a $4.7 million and $6.4 million loss on foreign exchange in the corresponding periods of 2023, respectively, and a $0.8 million gain on foreign exchange in the prior quarter. Accounts payable, taxes receivable and payable and deferred income taxes are considered monetary items and require translation from local currencies to U.S. dollar functional currency at each balance sheet date. This translation was the primary source of the foreign exchange gains and losses in the periods.
Previous wording
The following table presents the change in the U.S. dollar against the Colombian peso and Canadian dollar for the three months ended March 31, 2024, and 2023:
Current wording
The following table presents the change in the U.S. dollar against the Colombian peso and Canadian dollar for the three and six months ended June 30, 2024, and 2023:
Previous wording
Current income tax expense was $3.9 million for the three months ended March 31, 2024, compared to $17.6 million in the corresponding period of 2023, primarily due to a decrease in taxable income.
Current wording
Current income tax expense was $46.2 million for the six months ended June 30, 2024, compared to $37.4 million in the corresponding period of 2023, primarily due to additional current tax expense related to tax planning strategy, which is partially offset by a decrease in taxable income.
Previous wording
The deferred income tax expense for the three months ended March 31, 2023, was $15.3 million mainly as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Current wording
The deferred income tax for the six months ended June 30, 2024, was a recovery of $37.9 million primarily as a result of the recognition of additional tax losses resulting from a tax planning strategy which were partially offset by depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Previous wording
For the three months ended March 31, 2024, the difference between the effective tax rate of 100% and the 45% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, increase in the valuation allowance, non-deductible foreign translation adjustments, non-deductible royalty in Colombia, non-deductible stock-based compensation and other permanent differences.
Current wording
For the six months ended June 30, 2024, the difference between the effective tax rate of 19% and the 50% Colombian tax rate was primarily due to a decrease in the impact of foreign taxes, 2022 true-up related to tax planning strategy and non-taxable foreign exchange adjustments. These were partially offset by an increase in valuation allowance, other permanent differences, non-deductible stock-based compensation and non-deductible royalties in Colombia.
Previous wording
For the three months ended March 31, 2023, the difference between the effective tax rate of 142% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign translation adjustments, the impact of foreign taxes, non-deductible royalty in Colombia and increase in the valuation allowance. These were partially offset by other permanent differences.
Current wording
For the six months ended June 30, 2023, the difference between the effective tax rate of 145% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign translation adjustments, the impact of foreign taxes, non-deductible royalties in Colombia and non-deductible stock-based compensation. These were partially offset by a decrease in valuation allowance.
Previous wording
The deferred income tax expense for the three months ended March 31, 2024, was $13.5 million primarily as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Current wording
The deferred income tax expense for the six months ended June 30, 2023, was $29.3 million, primarily as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Previous wording
(1)Funds flow from operations is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to "Financial and Operational Highlights—non-GAAP measures" for a definition and reconciliation of this measure.
Current wording
(1)Funds flow from operations is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to note 2 “Non-GAAP measures” in "Financial and Operational Highlights" for a definition and reconciliation of this measure.
Previous wording
Capital expenditures during the three months ended March 31, 2024, were $55.3 million:
Current wording
Capital expenditures during the three months ended June 30, 2024, were $61.3 million.
Previous wording
During the three months ended March 31, 2024, we commenced drilling the following wells in Colombia:
Current wording
During the three months ended June 30, 2024, we commenced drilling the following wells in Colombia and Ecuador:
Previous wording
We believe that our capital resources, including cash on hand and cash generated from operations will provide us with sufficient liquidity to meet our strategic objectives and planned capital program for the next 12 months, given the current oil price trends and production levels. We may also access capital markets to pursue financing. In accordance with our investment policy, available cash balances are held in our primary cash management banks or may be invested in U.S. or Canadian government-backed federal, provincial or state securities or other money market instruments with high credit ratings and short-term liquidity. We believe that our current financial position provides us with the flexibility to respond to both internal growth opportunities and those available through acquisitions. We intend to pursue growth opportunities and acquisitions from time to time, which may require significant capital, be located in basins or countries beyond our current operations, involve joint ventures, or be sizable compared to our current assets and operations.
Current wording
We believe that our capital resources, including cash on hand and cash generated from operations, will provide us with sufficient liquidity to meet our strategic objectives and planned capital program for the next 12 months, given the current oil price trends and production levels. We may also access capital markets to pursue financing, including for repayment of debt in the future. In accordance with our investment policy, available cash balances are held in our primary cash management banks or may be invested in U.S. or Canadian government-backed federal, provincial or state securities or other money market instruments with high credit ratings and short-term liquidity. We believe that our current financial position provides us with the flexibility to respond to both internal growth opportunities and those available through acquisitions. We intend to pursue growth opportunities and acquisitions from time to time, which may require significant capital to be located in basins or countries beyond our current operations, involve joint ventures, or be sizable compared to our current assets and operations.
Previous wording
On February 6, 2024, we issued an additional $100.0 million of 9.50% Senior Notes due October 2029 (the “new 9.50% Senior Notes”), and received cash proceeds of $88.0 million. The new 9.50% Senior Notes have the same terms and provisions as the previously issued $487.6 million 9.50% Senior Notes except for the issue price. The new 9.50% Senior Notes accrue interest from October 20, 2023, the date of issuance of the previously issued 9.50% Senior Notes. The Company received cash payment of $2.8 million related to the accrued interest of the new 9.50% Senior Notes.
Current wording
On February 6, 2024, we issued an additional $100.0 million of 9.50% Senior Notes due October 2029 (the “new 9.50% Senior Notes”), and received cash proceeds of $88.0 million. The new 9.50% Senior Notes have the same terms and provisions as the previously issued $487.6 million 9.50% Senior Notes except for the issue price. The new 9.50% Senior Notes accrue interest from October 20, 2023, the date of issuance of the previously issued 9.50% Senior Notes. The Company received a cash payment of $2.8 million related to the accrued interest of the new 9.50% Senior Notes.
Previous wording
During the three months ended March 31, 2024, we re-purchased 886,666 shares at a weighted average price of 5.58 per share. During the three months ended March 31, 2024, we cancelled 28,612 held as treasury shares as at December 31, 2023 and cancelled 858,054 shares re-purchased during the three months ended March 31, 2024. During the period from October 20, 2023 to April 29, 2024, we have re-purchased 1,997,500 shares under the 2023 Program.
Current wording
During the three and six months ended June 30, 2024, we re-purchased 404,314 and 1,290,980 shares at a weighted average price of $9.20 and $6.71 per share (three and six months ended June 30, 2023 - 20,439 and 1,328,650 shares under the 2022 program at a weighted average price of $5.27 and $8.15 per share), respectively. We cancelled 28,612 held as treasury shares as at December 31, 2023 and cancelled 418,620 and 1,276,674 shares re-purchased during the three and six months ended June 30, 2024, respectively. During the period from October 20, 2023 to July 29, 2024, we have re-purchased 2,604,796 shares under the 2023 Program.
Previous wording
(1) Adjusted EBITDA and funds flow from operations are non-GAAP measures which do not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights - non-GAAP measures” for a definition and reconciliation of this measure.
Current wording
(1) Adjusted EBITDA and funds flow from operations are non-GAAP measures which do not have any standardized meaning prescribed under GAAP. Refer to note 2 “Non-GAAP measures” in “Financial and Operational Highlights” for a definition and reconciliation of this measure.
Previous wording
One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes, costs related to operations and debt transactions also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the three months ended March 31, 2024, funds flow from operations increased by 24% compared to the corresponding period of 2023, primarily due to an increase in sales volumes, lower transportation and quality discounts, and lower tax expenses. This is partially offset by higher operating costs and a decrease in Brent price.
Current wording
One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes, costs related to operations and debt transactions also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the three months ended June 30, 2024, funds flow from operations decreased by 13% compared to the corresponding period of 2023, due to higher income tax and lower sales volumes, partially offset by higher Brent price. Funds flow from operations for the six months ended June 30, 2024, increased by 7%, compared to the corresponding period of 2023, primarily due to an increase in Brent price, lower transportation and quality discounts and realized foreign exchange gain, partially offset by lower sales volumes, higher operating costs, taxes and interest expense.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•In the first quarter of 2024, the outstanding balance of $36.4 million under the Company’s credit facility was fully re-paid and the credit facility was terminated